Oil giants Shell and Eni face historic criminal charges over a tainted $1.1 billion deal struck for Nigerian oil block OPL 245 in 2011, Global Witness reported today. According to charges filed by Nigerian law enforcement agency, the Economic and Financial Crimes Commission (EFCC) at the High Court in Nigeria’s capital, Abuja, Eni, Eni’s Nigerian subsidiary Nigerian Agip Exploration Limited and Shell’s Nigerian subsidiary Shell Nigeria Exploration Production Company Limited are accused of conspiring to commit “Official Corruption contrary to Section 9 of the Corrupt Practices and Other Related Offences Act, 2000”. Former Nigerian Justice Minister Mohammed Adoke and former Oil Minister Dan Etete were also charged with official corruption for recieving over $800m from Shell and Eni. This is the first time that the two oil companies have been charged in Nigeria for their role in the deal.

Fresh money laundering charges were also filed against former Justice Minister Mohammed Adoke. The EFCC alleged in court filings that Mr. Adoke received $2,267,400 on September 16, 2013, Adoke is alleged to have received these funds as payment for the negotiations he brokered between Shell, Eni and Dan Etete’s company for the OPL 245 oil block.

The action from Nigerian law enforcement comes soon after Italian prosecutors moved to press charges over the OPL 245 deal. Milan prosecutors have requested the trial of Shell, Eni and Eni’s Chief Executive Officer Claudio Descalzi, Chief Operations Officer Roberto Casula and other individuals on international corruption charges. Italian proseuctors are seeking separate charges against four senior Shell executives including current Shell Foundation Chairman Malcolm Brinded, who was head of Global Exploration and Production at the time of deal.

In 2011, Shell and Eni paid $1.1 billion to Malabu Oil and Gas, a front company secretly owned by a former Nigerian oil minister, Dan Etete. Prosecutors have alleged that over US$500m went to “fronts for [former] President Goodluck Jonathan of Nigeria”. This corrupt deal deprived Nigeria’s people of a sum worth 80% of its 2015 healthcare budget. Shell and Eni have always denied that they knew the money would go to Malabu, but documents seen by Global Witness show that the companies constructed the deal knowing that the money would flow ultimately to Etete’s company. Former President Jonathan has denied the allegations, saying in a statement that he has never used fronts to “seek favour or collect any gratification on his behalf.”

“This is hugely significant. These charges show Nigeria’s intention to fight corruption by holding the powerful to account. The days when oil companies could use their influence to keep backroom deals with corrupt officials under wraps are over,” said Simon Taylor of Global Witness.

Global Witness, Re:Common and The Corner House have campaigned to expose the corruption around the OPL 245 deal for several years.

The two oil companies and their investors risk losing their rights to the block, as a result of this crooked deal shareholders knew nothing about potentially affecting their future oil reserves. In January 2017 Nigerian authorities seized the block, pending the prosecution of the oil companies involved. Nigerian law enforcement labelled the oil block “proceeds of crime”. Shell and Eni have appealed.

The case demonstrates why new laws in the EU which came into force in 2016 and require extractive companies like Shell and Eni to report payments they make to governments for natural resource deals are needed. This information allows citizens of resource rich countries to identify what deals are being made on their behalf for their natural assets like OPL 245. Shell and other companies should stop attacking these laws and get behind the global move towards greater transparency.

Nick Hildyard of The Corner House said, “It is excellent to see the Nigerian and Italian authorities together seeking justice and tackling the ‘fantastic corruption’ that the Global North promotes and benefits from.“

Antonio Tricarico of Re:Common said, “The Italian Government and other Eni shareholders must ask if Eni’s board has been asleep at the wheel over the company’s governance. Eni’s board should not be reappointed in April this year with an impending trial over serious alleged criminality by the CEO and other senior executives.”

In a statement on the 28th February, Eni claimed to have carried out an investigation into corruption allegations which apparently found “no evidence of corrupt conduct in relation to the transaction.” Global Witness has raised concerns that Eni mislead investors on their knowledge of the deal, as this investigation has been shown to be flawed when the company admitted that none of Eni staff under investigation who now face trial - including the current CEO Descalzi were even interviewed.

A Shell did not immediately respond to a request for comment Shell previously denied wrongdoing and has stated that ”Shell takes this matter seriously and is co-operating with the authorities.”

2.
In 2011, Shell and Eni paid US$1.1billion for oil block “OPL 245” to Malabu Oil and
Gas, a “front”
company owned by former Nigerian oil minister Dan Etete, the payment was made
through an arrangement made with Nigerian officials of the day. Etete had
awarded his company the block in 1998 when serving under corrupt former
dictator Sani Abacha. A briefing on the background to the story “Shell and Eni's
Misadventures In Nigeria” is available at https://www.globalwitness.org/en/campaigns/oil-gas-and-mining/shell-and-enis-misadventures-nigeria/

5.
In December 2016 money laundering charges were filed by the Nigerian law
enforcement against Dan Etete and the former Nigerian Attorney General and
Justice Minister Mohammed Adoke. In a statement in December 2016, Mohammed
Adoke said “I
hope to at the appropriate time make myself available to defend the charge for
what whatever its worth,” he also emphasized that he did not benefit from the
deal, which he said saved the government from a breach of contract suit in
which Shell was claiming $2 billion. He called the charges "orchestrated
plans to bring me to public disrepute in order to satisfy the whims and
caprices of some powerful interests on revenge mission." The full statement
from Mohammed Adoke is available at http://thenationonlineng.net/malabu-will-come-defend-adoke/